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NEW YORK, March 18 (Reuters) - Venezuela’s sovereign debt prices rallied on Tuesday and debt spreads tightened almost half a percentage point after a U.K. court lifted a $12 billion freeze of state-owned oil company PDVSA.
Petroleos de Venezuela’s assets had been frozen in January during a legal battle with ExxonMobil (XOM.N). The two companies are in arbitration over oil projects nationalized by President Hugo Chavez last year.
But, after hearing PDVSA’s arguments, the judge ruled in favor of the Venezuelan company, awarding legal costs against Exxon and ordering the Texas-based company to pay compensation for any damages caused by the imposition of the freezing order. For details, see [ID:nL1885689].
That was the “best-case scenario for Venezuela and PDVSA. We expected at a minimum the injunction would be reduced, but to have it vacated is clearly even more bullish,” Lehman Brother’s analyst Gianfranco Bertozzi said in a note to clients.
Venezuela’s debt spreads over U.S. Treasuries, an important gauge of risk aversion, tightened 47 basis points to 604 basis points on the JP Morgan EMBI+ index 11EMJ.
Venezuela’s benchmark global bond due 2027 VENGLB27=RR jumped 1.125 point in price to bid 96.313. An overall rally in emerging markets was also supporting Venezuelan debt. (Reporting by Walter Brandimarte, editing by Walker Simon)